❝ How can we create, as Oxfam’s Winnie Byanyima puts it in this article, “an economy that works for the 99% “ and not just the fortunate few?
We asked 10 Davos participants for their thoughts; here’s what they had to say.
Diane Coyle, Professor of Economics, University of Manchester
❝ I would pay teachers at schools in poor communities such high wages that the very best people would want to take the job. That’s not the only change needed in education. We must also think more seriously about the skills our children will need for the world they’ll graduate into, and how to equip them with those skills. And the needs will differ from place to place, so more local control over education policy would make sense, too. But the top priority should be getting society’s most talented people on the task of preventing whole communities from falling further and further behind.
Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics, Harvard University
❝ …Trade protectionism will not bring back disappearing manufacturing jobs to the United States or Europe. Instead it will only raise prices of many goods that low-income consumers depend on, and accelerate the pace of mechanization. The best solution to inequality in advanced economies lies in greater redistribution through taxes and transfers, and in improved – and more equal – education at all levels…
Sharan Burrow, General Secretary, International Trade Union Confederation
❝ …Wage share continues to fall further behind both productivity and profits. People are fighting back at the ballot box but tragically the alternatives offered by populist political leaders, with people excluded by race, religion, gender or sexual preference, will not offer inclusive solutions. Governments are caught in the web of corporate capture and fail to regulate or to defend their own people by prosecuting corporations for human and labour rights abuse. Tax fraud and unjust corporate tax concessions threaten essential public services…
RTFA. This is just a taste from a single article. Like the best forums, particularly internationally chartered, a pretty wide range of viewpoints is on display in Davos, this year.
If, like Donald Trump, you think you’re better off ignoring the discussion, then, I’d suggest President Xi’s response to that concept: “Pursuing protectionism is like locking yourself in a dark room, which would seem to escape the wind and rain, but also block out the sunshine and air…”
Bill Gross is sometimes called the Bond King. He’s one of the two economists who popularized the term, the New Normal. Describing everything from grudgingly slow recovery from the Bush Great Recession to ever-widening disparity in real income for working class folks versus the one-percenters.
Usually, nothing less than a Boston Bruins victory gets Tom Keene as animated as Bill Gross did. 🙂
❝ Americans with no more than a high school diploma have fallen so far behind college graduates in their economic lives that the earnings gap between college grads and everyone else has reached its widest point on record…
College graduates, on average, earned 56 percent more than high school grads in 2015, according to data compiled by the Economic Policy Institute. That was up from 51 percent in 1999 and is the largest such gap in EPI’s figures dating to 1973.
❝ Since the Great Recession ended in 2009, college-educated workers have captured most of the new jobs and enjoyed pay gains. Non-college grads, by contrast, have faced dwindling job opportunities and an overall 3 percent decline in income, EPI’s data shows…
College grads have long enjoyed economic advantages over Americans with less education. But as the disparity widens, it is doing so in ways that go beyond income, from homeownership to marriage to retirement. Education has become a dividing line that affects how Americans vote, the likelihood that they will own a home and their geographic mobility.
❝ The dominance of college graduates in the economy is, if anything, accelerating. Last year, for the first time, a larger proportion of workers were college grads – 36 percent – than high school-only grads – 34 percent, Carnevale’s research found. The number of employed college grads has risen 21 percent since the recession began in December 2007, while the number of employed people with only a high school degree has dropped nearly 8 percent…
❝ The split is especially stark among white men. For middle-age white men with only high school degrees — the core of President-elect Donald Trump’s support — inflation-adjusted income fell 9 percent from 1996 through 2014, according to Sentier Research, an analytics firm. By contrast, income for white men in the same age bracket who are college graduates jumped 23 percent.
The AP is starting to fill the gap in journalistic choice formerly led by reporting from Reuters and the NY TIMES. Not that the AP has raised standards. Just maintained what they always had while the competition oozes downhill. Especially Reuters since their purchase by Thomson.
RTFA, please. Many more topics of interest needing discussion and thoughtful reflection. As an example: “…Women with college diplomas enjoy an 8-in-10 chance of their first marriage lasting 20 years…That’s double the odds for women with just high school degrees.”
Who’da thunk it?
❝ A pack of Nobel Prize-winning economists gave Donald Trump and his policy plans the thumbs-down on Friday, with one saying the president-elect’s programs could lead to a deep recession.
Speaking on a panel during the first day of the annual American Economic Association meeting in Chicago, the Nobel laureates voiced a variety of concerns about the billionaire developer’s stance, from his haranguing of U.S. companies about their outsourcing plans to the risk that his tax and spending proposals could lead to run-away budget deficits.
“There is a broad consensus that the kind of policies that our president-elect has proposed are among the polices that will not work,” said Joseph Stiglitz, summing up the views of the panel that included his fellow Columbia University professor Edmund Phelps and Yale University’s Robert Shiller…
❝ …While other presidents have run big budget deficits in the past, they depended on foreign purchases of U.S. debt to do so.
With Trump threatening to renegotiate U.S. trade agreements and shift to an “America First” policy, the willingness of foreigners to keep buying U.S. government securities can’t be taken for granted, University of Chicago’s Roger Myerson said.
America’s interaction with other countries “has to be based on confidence and trust,” Stiglitz said.
The world view of the United States – right now – wavers between contemptuous laughter and risk-based angst. In my mind, quite justifiably.
❝ …Indeed, the marijuana industry seems set to explode. This week, Arcview Market Research announced that in 2016, the legal weed market in North America generated $6.7 billion, up 30% from 2015, when marijuana was the second-biggest growth industry in the US (after peer-to-peer lending platforms).
❝ Washington DC, and 28 states have passed laws, with various caveats, allowing medical marijuana use. As of this month, recreational cannabis is legal in Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, Washington, and DC. Possession has been decriminalized in 13 states. Overall, more than 20% of adult Americans now have access to weed, medically or recreationally.
❝ …“Canadians have had a medical marijuana program since the 1990s. I grew up knowing adults who smoked weed,” Lisa Harun, co-founder of Vapium, explains. “It’s medically recommended for 200 conditions, and it could help a lot of people who are popping pills right now.”
After more than a year of research and development, in early 2014, Vapium released its first device and there’s no going back for Harun or the company. She was a little nervous to talk to her “elders” about the new manufacturing plans at first, explaining, “I do a pulse check before launching any conversation.” But everyone’s been surprisingly receptive, from her 12-year-old nephew…to her 85-year-old great aunt, who expressed hope that the cannabis vaporizers find use in every home.
❝ Harun believes the increasing recognition of weed as therapy makes it ever-easier to get into the industry. She suggests that anyone who is interested consider either applying an existent passion to the developing marijuana market — like law or baking, say — or for those who don’t know what they love yet, use this trick to figure out a way in: “Think of a problem you want to solve and the people who suffer from it — even something simple like stress, or menstrual pain — and consider how cannabis could be or is being used to address it.”
I guess I should look at the baking side of the equation. It’s been almost 60 years since I quit smoking and even a half-legit rationale for vaping couldn’t tempt me. OTOH, if I get to where I need chemical/pharmaceutical management techniques for pain management – I’d probably try working some weed into my weekly batch of bran/blueberry muffins.
❝ Miriam Grunstein is an attorney and former advisor to the Mexican Senate on energy and international law. Legislation has been proposed at the Mexican Senate that bans the use of public funds on any project that is “against the country’s interest.” That’s widely taken to mean the wall.
“Just because of, you know, tantrums, we could really waste a golden opportunity of uniting,” Grunstein said.
❝ The proposed Mexican legislation would lead to a review of some of the most fundamental treaties between the two countries, among them the 1848 Treaty of Guadalupe. The treaty ceded Texas and California, as well as parts of Arizona, Colorado, New Mexico, Nevada, Utah and Wyoming to the U.S.
❝ The bill also states, “in cases where the assets of our fellow citizens or companies are affected by a foreign government, as Donald Trump has threatened, the Mexican government should proportionally expropriate assets and properties of foreigners from that country on our territory.”
Translated that means that should Trump follow through on threats to expand the wall, withdraw U.S. participation in NAFTA or stop remittances, Mexico could target U.S. assets in Mexico. Assets estimated by the Office of the U.S. Trade Representative at over $100 billion.
Trump’s blather seems to have drawn a film of ignorance over the brains of many papier-mache journalists. Favorite example? Financial analysts who wonder why housing construction “suddenly” lacks sufficient skilled and/or experienced labor to meet demand.
Reason 1: Greedy contractors who put Mexican immigrant labor to work for cheaper than trained native workers. Driving the latter from that jobs market a couple of decades ago.
Reason 2: The Great Bush Recession killed many of those jobs. Folks went back to Mexico. Harder to return, now – especially since many of those who returned to Mexico now have jobs back home. Why come here to get their chops busted all over again?
Alstom Foundation workers in Brazil – doing it on their own
❝ Brazil will restore 22 million hectares of land in what’s being called “the largest restoration commitment ever made by a single nation.”
“We are a country of forests,” says Rachel Biderman, director of the World Resources Institute in Brazil. “The national strategy for the restoration of forests and degraded areas positions Brazil as one of the global leaders in the development of a forest economy.”
❝ Between now and 2030, Brazil plans to rehabilitate 12 million hectares of forest land that is degraded or deforested. The balance of the area will be restored and developed through the country’s Low-Carbon Agriculture Plan for crops, managed forests, and pastures. Brazil made the plan public at the United Nations Conference on Biodiversity in Cancún, Mexico, on December 3rd…
❝ Biderman said in a statement. “Restoring 22 million hectares — an area larger than Uruguay — will absorb huge amounts of greenhouse gas emissions, generate clean and plentiful water, and boost agricultural productivity.”
In addition, she said that the healthier, more productive landscapes will generate new jobs and boost Brazil’s economy. According to the WRI, Brazil’s Ministries of Environment and Agriculture teamed up to put together the deal.
Biderman added: “We have all the conditions — ecological, economic, and material — to be internationally competitive, improving technical knowledge and creating jobs.”
Regional collective action seems to continue apace in a number of areas on this planet with a healthy conscience – and an even healthier understanding of the economics of building a Green economy.
The first freight train from China to London set off on Sunday on a journey that will cover a staggering 7,456 miles.
It departed from Yiwu West railway station in Zhejiang Province, China, and will arrive in Barking, London, having been trundling along for 18 days.
Its route will snake through Kazakhstan, Russia, Belarus, Poland, Germany, Belgium, France and finally Britain.
The service is being run by the China Railway Corporation. Britain is the eighth country to be added to its list of destinations, with London its 15th city.
The new route is set to boost trade ties between the UK and China with goods such as clothing and bags delivered along the re-established Silk Road, connecting Europe and Asia, according to The Indian Express, which cited a report from Xinhua news agency.
The focus on strengthening trade by expanding China’s railway infrastructure and network is part of Chinese president Xi Jinping’s ‘One Belt, One Road’ strategy, announced in late 2013.
I don’t think anyone asked Donald Trump for planning permission. Or ever will.
❝ When you hear the name “Rick Perry,” you might recall that time during the 2012 Republican presidential primary race where he forgot the name of a government agency he wanted to eliminate. After saying he wanted to ax the Department of Commerce and the Department of Education, he blanked on the third. Later in the debate, he said that his forgotten target for destruction was the Department of Energy.
A responsible leader doesn’t forget the name of a government agency that he wants to shut down. A responsible leader studies the department in detail, learning all of the things that it does, and thinks about how things would change if the department were abolished. And so for Perry, that “oops” moment was enough to persuade voters that he lacked the firm grasp of the facts needed in a presidential candidate. He soon abandoned the race…
❝ In reality, the department was created in an effort to increase government efficiency by combining of a bunch of existing agencies. One of these was the Energy Research and Development Administration, the successor to the Atomic Energy Commission, which itself grew out of the Manhattan Project. That agency managed the U.S.’s nuclear weapons programs. This is still one of the Energy Department’s jobs — it includes the National Nuclear Security Administration, which oversees the safety of the U.S. nuclear stockpile.
The Energy Department’s roots in nuclear energy also show that it wasn’t simply a response to high oil prices. Government support for nuclear power boomed in the 1950s, when oil was cheap. The goal wasn’t to avert a fossil-fuel crunch, but to give humanity even cheaper sources of power.
❝ That’s still the department’s goal. As Bloomberg New Energy Finance reports, solar energy is now cheaper than coal power in many places, even without government subsidies, and is getting cheaper still. As a partial result of this technological improvement, coal is on the wane, while solar is booming. Scaling plays a huge part in this process.
Solar’s rise hasn’t come because of a fundamental technological leap, but because of learning curves. As production rises, prices tend to fall…
That means the Energy Department’s subsidy programs, which encouraged solar growth back before the economics made sense, probably had a hand in jump-starting the era of abundant energy that we now see stretching before us.
❝ More to the point, we should just stop rewarding intellectuals and politicians for casually calling for the abolition of government agencies in the absence of understanding what they actually do.
No doubt, my call is likely to fall on deaf ears, at least while the Trump administration is in power: Perry has…been nominated to head the Energy Department.
Noah Smith is one of the best and brightest of today’s young American economists. He is a Bloomberg View columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion. He’s definitely worth following on Twitter @Noahpinion.